Market update: London’s property market Winter 2024

Activity in the prime London sales market picked up before the Autumn Budget in late October, and momentum continues as pent-up demand also returns to the market amid further rate cuts. 

The speculation around changes to Capital Gains Tax (CGT) in the Budget prompted some vendors to bring forward their sale plans, increasing supply and attracting more buyers. UK mortgage approvals hit the highest levels since 2022 in September this year. Average prime London property values show 0.4% growth in the year to September, up from -2.3% in September 2023. More growth is expected in the coming months as November’s base-rate cut takes effect and further cuts happen next year. Another stamp duty ‘cliff edge’ in April will bring activity forward to the end of this year and early 2025.  

Demand remains strong in the prime London rental market, but annual rent growth slowed from 2.5% in June to 1.4% in September. Average rents for central London houses fell by 1.4% in Q3 but remain 10% higher than March 2022.  

Ed Milliband, the Secretary of State for Energy Security and Net Zero, has referred several times now to a consultation on when augmented EPC requirements will come into force for private landlords. The previous government set the rating C deadline for rented accommodation to 2030. As landlords monitor this situation, some may review portfolios and release more stock into the market. However, despite price sensitivity amongst buyers and sellers, agents report ongoing investor interest in prime London rental properties. 

What does the UK’s Autumn Budget mean for the housing market? 

The Chancellor’s Budget raised the stamp duty surcharge for additional homes to 5%, up from 3%, for investment properties and second homes. 

Another rise in stamp duty is coming for all buyers in April next year, as the thresholds and rates return to pre-2022 levels, which means there may be more activity in the market in the run-up to that change. The Treasury is still expecting many second home and investment property transactions to happen, forecasting that their 2% surcharge increase will raise an extra £200 million between now and April 2026. While CGT was increased for most assets, it remained unchanged for property. All other rates now match those for property, at 18% for basic-rate and 24% for higher/additional rate taxpayers. Read more in our blog.

Source: Savills prime London Index, 2024

Source: Land Registry

Source: Land Registry

What’s happening in Chelsea? 

• 4.19% Average yield for rental flats in Chelsea, Q3 2024 

• 0% Annual change in prime central London rents, Sep 2024 

• +12% Annual rise in supply of homes for sale in Chelsea, Nov 2024 

• -1% Annual change in value of prime central London property for sale, Sep 2024 

• ^ The number of prospective buyers registering interest in property rose 20% Sept – Nov 2024 in Chelsea office 

Chelsea continues to be an attractive destination for renters looking for some of London’s most sought-after and best-in-class properties. The area has timeless appeal and some of the best presented properties in the city with access to an excellent culinary and arts scene. Demand for rental properties has remained strong during the Autumn and into Winter, with a sustained high level of international demand. There is particular interest from North American professionals looking for a London address. 

Supply levels have risen since the start of the year, but the best-presented properties, correctly priced, are still gaining good traction in the market. We also saw a flurry of activity on the supply side in the sales market in September, with some landlords, concerned about potential rises in CGT, opting to bring forward their plans to sell. This has settled following the budget announcements, with CGT remaining unchanged for property sales. However the increase in the Stamp Duty surcharge for additional properties is likely to put some pressure on price negotiations at the top-end of the market and may continue to constrain price growth in the wider prime London market in the coming months. There is an argument that this provides a unique opportunity for first time buyers to acquire property in highly desirable central London locations. 

Property currently on the market that is accurately priced is generating strong viewings and achieving sales closer to asking prices. 

What’s happening in Hyde Park & Marylebone? 

• +5% Rise in supply of properties to rent, W1, W2, year to Nov 2024 

• 0% Average prime central London rents are unchanged in year to Sep 2024 

• +7.8% Rise in supply of properties for sale, W1, W2, in the year to Nov 2024 

• -1% Annual change in vale of prime central London property for sale, year to Sep 2024 

• ^ Tenant registration is up 49% in the 6 months to Nov 2024 in Hyde Park office 

Falling mortgage rates have ignited renewed buyer interest in Hyde Park and Marylebone in recent months, leading to a significant uptick in sales transactions year-on-year. Pricing for apartments in the area remains relatively stable while the post-pandemic spike in pricing for houses has softened back to pre-pandemic levels. 

Competitive pricing remains crucial for maximising viewings, attracting multiple offers, and ensuring a swift sale. It is also noticeable that well-presented, furnished properties are gaining better online engagement and enquiries, leading to a quicker sale. 

The local lettings market has been buoyant since 2021, with strong tenant demand and limited supply of available property. While rental growth has moderated from the highs registered last year, it is firmly in positive territory, reflecting the area’s enduring appeal to investors. 

W2 attractiveness has been further enhanced by the arrival of established brands over the past year. New additions such as Boxcar and Kendal Street Kitchen have emerged not merely as dining establishments, but as community hubs, contributing to the neighbourhood’s vibrant and desirable atmosphere. This combination of a robust property market and thriving local amenities underscores Hyde Park and Marylebone’s positions as prime locations for both residents and investors. 

What’s happening in Islington? 

• -10.3% Supply of rental properties in Kings Cross and Islington down 10.3% year on year 

• +2.4% Annual change in value of prime London rents North & West, Sep 2024 

• +3.6% Annual change in value of prime London property for sale, North & West, Sep 2024 

• 0% Supply of homes for sale in Kings Cross and Islington unchanged on the year 

• ^ The number of prospective buyers registering interest in property rose 17% Sep – Nov 2024 in Islington office 

The Islington sales market continued to register high levels of demand across all price points, underlining it’s continued appeal as a prime London location. Despite uncertainty in some markets in the run up to the General Election in July and the recent October Budget, we have seen local buyer numbers remain steady, as well as welcoming buyers making a move to Islington from further afield. We have also recently had investors looking to purchase rental properties, despite the additional Stamp Duty surcharge introduced by the Chancellor. With further changes to Stamp Duty coming into force from April, we expect to see continued high levels of demand, particularly at the mid-level of the market. Islington’s vibrant cultural scene, eclectic mix of amenities and local transport links will ensure this area remains a desirable place in which to live and invest. 

As we move into the cooler Winter market, tenant demand across Islington continues to ease reflecting both the change of season and a pronounced easing in rental growth following a sustained surge over the past few years. This has been noticeable across all price points in the area and means that only properties which are correctly priced will gain traction in the market. Clients taking the time to dress their properties are outperforming their peers. Meanwhile, the garden squares close to Upper Street and other prime addresses in N1 and N5 remain enduringly popular. 

What’s happening in Shad Thames?  

• +8.2% Annual change in rents in Southwark, Sep 2024 

• +16.4% Rise in supply of properties for sale, SE1, SE16 year to Nov 2024 

• -1% Annual change in value of property for sale in Southwark, Aug 2024 

• £638,588 Average sold price for flats in SE1 and SE16, year to Nov 2024 

• ^ Prospective renters registering interest is up 32% in 6 months to Nov 2024 in Tower Bridge office 

The sales market in Tower Bridge remained strong through the Summer and Autumn amid falling mortgage rates. While there was a bit of ‘wait and see’ in the run-up to the Budget, activity levels since then signal that the market will remain strong in the run-in to the New Year. One and two-bedroom properties are attracting the most attention at present, with those priced up to £700,000 registering the highest footfall. In some cases, this is leading to multiple bids and achieving in excess of sale price. After the Budget, we have received enquiries from landlords wanting to discuss their options in the sales and rental market, and would advise any potential vendors to consider making their next steps sooner rather than later when there may be more homes coming to the market. 

Rental inflation has surged over the preceding few years driven by landlords exiting the market mainly owing to pressure from higher mortgage interest rates. As we move through the cooler Winter market it is likely that rents may correct to some extent, however, the increase to Stamp Duty provides a further disincentive for landlords to expand portfolios or for new entrants to enter the buy-to let market, so this trend may quickly reverse as we move further into the new year. With more balance in the market, we are finding that correctly priced and well-presented properties are outperforming their peers, and riverfront homes are still commanding a substantial premium. Corporate tenants moving into both SE1 and SE16 remain active and whilst preferences vary, developments with facilities such as on-site gyms and porters prove most popular.  

With the implementation of new legislation approaching and recent economic announcements, landlords may be considering their portfolio’s future. Whether your aim is to expand or consolidate, we offer objective, strategic guidance on how best to achieve your property goals. 

What’s going on in Wapping & Limehouse? 

• +9.7% Annual change in value of rents in Tower Hamlets, year to Sep 2024 

• +5% Rise in number of properties available for sale in E1W, E14, year to Nov 2024 

• £707,585 Average sold price for property in E1W, year to Nov 2024 

• +2.4% Annual change in value of property for sale in Tower Hamlets, year to Aug 2024 

• ^ Number of prospective renters registering interest rose 23% in 6 months to Nov 2024 in Wapping office 

Activity in the market slowed in the run-up to October’s Budget, with potential vendors and buyers waiting to see which measures, if any, the Chancellor would announce. Activity since then suggests that the changes to Stamp Duty for purchasers of additional dwellings has not deterred buyers in the Wapping and Limehouse areas, and that buyers are now also keen to take advantage of lower mortgage rates. 

Competitively-priced and best-in-class property across all  

price points are achieving the most interest. We are seeing an increasing number of landlords wanting to discuss their options in both the sales and rental market, signalling there may be a rise in sales property in the coming months as some landlords choose to exit the market. 

Any reduction in rental supply in Wapping and Limehouse could put pressure on the market, as supply fails to keep up with demand. There may be some upwards pressure on rents as a result, but only for correctly priced and best-in-class properties. 

Wapping and Limehouse, with an enviable riverside location and multiple transport links and a wide array of amenities, remains a popular location for renters in the capital, and we continue to see high levels of demand from renters who have fixed their search on this unique pocket of central London. 

Sources: Cluttons Chelsea, Cluttons Hyde Park, Cluttons Islington, Cluttons Tower Bridge, Cluttons Wapping, Land Registry, Lonres, Savills Prime Index Q3 2024, Zoopla

The information provided in this report is the sole property of Cluttons LLP and provides basic information and not legal advice. It must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of Cluttons LLP. The information contained in this report has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the accuracy of this information. Cluttons LLP does not accept any liability in negligence or otherwise for any loss or damage suffered by any party resulting from reliance on this publication.

Selling or letting your home this winter? We are here to make your property stand out from the ordinary.  

We market your home as we would our own, going the extra mile to secure a sale, or find a dependable tenant. With a strong emphasis on personal service, we listen to what our clients want to achieve and always provide objective advice, with the intent on building long-term and trusted relationships. 

If you are thinking of selling or letting your home, or already have your property on the market but would like a second opinion, please do get in touch with our local experts.